How badly have you been hurt by the market crash so far? The answer depends much more on your economic situation than it does on the amount you lost. People in or near retirement are affected most by market crashes because they are no longer getting paid and their investment horizon is limited. They could very well run out of money. That’s why target-date funds are safer for those near retirement than they are for younger people, but the fact is that most are not safe enough, as we’ve learned in this market crash as well as the crash of 2008. A couple of TDFs have actually succeeded in protecting in the Risk Zone, but most have not. The Risk Zone is the 5 years before and after retirement.

In this article, we provide performance benchmarks tied to your investment horizon and your risk preference. If your horizon is long, traditional wisdom says you can afford to take substantial risk, but you’re certainly not obligated to take a lot of risk, so for each of 3 investment horizons, we provide three choices—conservative, moderate and aggressive risk -- using the live results for target-date funds (TDFs).

Most investors own a diversified portfolio consisting of several asset classes, so you’d like to know how similar multi-asset portfolios have performed and why you’ve succeeded or failed relative to your TDF benchmark.

Target date funds make good benchmarks for evaluating your performance because they are well diversified and vary by horizon/age, being more aggressive for young people and more defensive for older people.

There are three choices of TDF benchmarks: conservative, moderate and aggressive. If you’re not sure which you are, you can use this self-assessment guide.

Here’s how TDFs have performed in 2020, and why. We provide a Conservative benchmark that uses the patentedSafe Landing Glide Path (SLGP) that we use at GWM, a Moderate benchmark that is followed by the TDF Industry, and an Aggressive benchmark that extends the Moderate benchmark. The results are live. The SLGP is used by the SMART target date fund indexcollective investment trust, and the “Industry” is the S&P Target Date Index,a consensus index.

Evaluating Your Multi-asset Portfolio Investment Performance in 2019

It’s been a very challenging year so far. You’ve won if you haven’t lost In the chart below, locate your horizon. Then choose the return associated with your risk. Is your return above or below this benchmark? To understand why you’re winning or losing, see the next section below on Asset Class Performance.

Source: Glidepath Wealth Management

You may have succeeded by losing 25% or less, or success could require a return above zero, depending on your horizon and risk preference. Long 30-year horizon Aggressive funds have lost 25, less than the US stock market’s 20% loss. As for the shortest horizon investments, the Now Aggressive funds have lost 15%. By contrast, the Conservative benchmarkhas outperformed for all horizons. Conservativeness has won so far this year.

Conservative has won before in 2008, 2011 and 2018, and Conservative has won by not losing over the history of TDFs.

Individual Retirement Account (IRA) Performance

The average IRA is 60/40 stocks/bonds regardless of age. They appear to all have the same investment horizon although we know that’s not true. Consultants have brought “the 60/40 Solution”to all their clients. This mix is closest to the Moderate risk with a 15-year horizon, which has lost 17%

The next section provides details to determine why you’re winning or losing. If you’ve allocated to better-performing asset classes, you should be winning. But if you’ve concentrated in poorly performing assets, your performance will likely lag. Learning why your performance is good or bad is a good way to start refinements to your asset allocation in 2020.

Asset Class Performance

Every asset class except bonds lost money in the first quarter of 2020. Real estate lost the most, down 27%. Gold and US bonds protected with 4% and 3 returns. Until this year, US stocks were the place to be, earning the highest returns.

Conclusion

Did you succeed or fail so far this year? In this mess, success means not losing much. What changes will you be making for the rest of the year?

This correction follows the longest stock market recovery on record, so many thought it was due, but no one saw the Coronavirus coming. The fact is there are 10 things to be concerned about, in addition to the Coronavirus. Are you concerned? If so, you may want to move to safety. But what is safe, and what if your portfolio is already as safe as it should be? To answer these questions, please take our risk assessment quiz.

GlidePath, in association with vetted financial advisors, provides a comprehensive array of financial planning and investment management services to individuals, couples, and families. GlidePath emphasizes planning and investing for retirement because they are frequently the primary financial needs of our clients. Our unique investment management services are based on a patented glide path investment process and Nobel Prize Winning theory that is designed to make your assets last a lifetime. All GlidePath clients have dedicated financial advisors who are responsible for tailoring our services to their specific requirements.